Facebook Gambling: A David And Goliath Story
Published 1st January 2015
The story of David versus Goliath has always fascinated me – it’s no secret that the world loves the underdog and if you take the tale at face value then yes, David, certainly does fit that bill - and moreover, is widely cited as fitting that bill. I, however, look at things from a different perspective. We can safely assume that both David and Goliath were very good at their own particular skills. After all, Goliath had dominated every previous challenger, and in contrast, when preparing for the battle, David blatantly refused all sorts of armour and weaponry and confidently opted only for a single slingshot and five stones. So then it all comes down to the relevant skills each challenger had within the particular circumstances of their encounter. Goliath had a bronze spear - potentially lethal, for sure; but fighting with a spear needs close proximity to the opponent in order to be useful in any way. On the other hand, a slingshot is most effective from a distance. The battle, such as it was, took place with the adversaries positioned far away from each other. Ergo, it was actually David that had the upper hand and Goliath never had a chance to bring his spear into action. In this very specific situation it was actually David that had the right skills, not Goliath – so who really was the underdog, and why should we be surprised that David was the winner?
It’s possible that you’re wondering at this point why I’ve analysed this biblical story, but there are definitely some parallels that can be made with the battle for supremacy (or not as the case may be) in the sphere of real money gambling on Facebook. In 2012, after many intense months of protracted negotiations between Facebook and key proponents of the gambling industry, the quiet giant that is Gamesys was finally anointed as the victor, and in August launched Bingo Friendzy as the first real money gambling site on the social network. Six months later, to the day, global superstar 888 launched a competing offering called Bingo Appy, and this was followed by Bonza Gaming (a partnership between Unibet and Plumbee Games, the latter being a longstanding social gaming company). At this point, a full selection of casino and bingo games were on offer within the recognisable framework of the Facebook site and the select group was eventually joined by Paddy Power’s sports betting offering BetDash some months later. By mid-2014 however, less than two years after what could arguably be called an experiment by Facebook, the three “Goliath” companies that are 888, Gamesys and Paddy Power have quietly withdrawn most or all of their offerings. Even bwin.party’s effort with Zynga failed to impress on any meaningful scale. The last man standing is the smaller and unassuming Bonza Gaming. What is interesting about this is Bonza Gaming’s Plumbee entity is a company with its roots in social gaming, not real money gambling, and as the entire gambling industry is learning the hard way, social gaming is a very different product suite to real money gambling. The revenue model is different, the cross-over between the two is languishing below five percent and the player motivations are different. This is potentially why Bonza Gaming had the right skill set, market and consumer understanding that allowed it to accomplish what the others apparently couldn’t. That being said, nobody knows what the future holds and all we can do is judge what’s happening today. In the past four years, a staggering $1.2 - $1.5 billion has been spent on M&A activity between the social and the real money sectors. Twelve percent of the global population play social games of some sorts, and of these there are over 170 million players of casino style social games. That’s more than three times as many real money gamblers in the world. But unlike real money gambling, social games – be they leisure or casino style – have no higher purpose other than to please the players while they are playing and only approximately two percent ever spend any money on the game play.
The social gamer and the traditional gambler have different product requirements. In the social sphere, game flow needs to be intuitive and simplified and contain extensive social hooks and inherently incorporate the social graph. Simply adding in elements such as refer-a-friend, or the ability to post to a Facebook timeline doesn’t turn a real money gambling game into a social game. While there is real money gambling and social gaming, the existence on a large-scale of the middle-ground that is social gambling is yet to be established. To this end, Facebook is simply an affiliate, not an enabler. When it comes to the game, look and-feel needs to be appropriate for the medium, while recognising that the actual gambler is the same as one acquired via traditional marketing means. The real money gamblers are the same, whether acquired internally or externally from the newsfeed. Yet, it could be argued that the Facebook real money bingo sites were dumbed down in an effort to compete with the freemium social games, which have subsequently been proved as useless in being a funnel for customer acquisition. At launch, Bingo Friendzy also suffered the wrath of Christian groups and the print/online media being accused of using imagery of furry animals that resemble Moshi Monsters, a children’s toy and game. While Bingo Appy was more “adult”, the site was still quite a departure from the company’s core and traditional offerings. Not everything can be attributed to factors that the operators could control. Firstly, to meet jurisdiction requirements and regulations, the registration and payment process for the real money gambling sites took place as normal - outside of the Facebook login and in-built payment system. This unfortunately is the nature of the beast and is vastly different to social games themselves where the players find a seamless process with no added steps or inconveniences. In addition, while Facebook is holds the customer acquisition hopes and dreams of many B2C corporations, the reality is that the network has never been successful at anything other than, well, being Facebook. Despite the fact that in a global population of 7 billion where the site has 1.3 billion monthly active users, the company has a long list of failed endeavours. Facebook Home, Deals, Places, Online Offers, Questions, Subscribe, even Credits are all among the innovations that have been attempted and subsequently abandoned. The only picture-based product that has succeeded is Instagram, and that was a very pricey purchase that continues to operate separately, and the two efforts to compete with Snapchat, Poke and Slingshot never got traction.
Retailers large and small abandoned their Facebook “storefronts” as the consumer conversion wasn’t there either – so it’s not just a gambling thing. The network is experiencing record revenues; however the predominant inflow of money is coming from advertising and social gaming as consumers mainly use the actual site for its original purpose – a place to virtually hang out with friends. Maybe real money gambling on the network never had a chance and we need to go back to viewing the site as merely another media outlet.
“Simply adding in elements such as refer-a-friend, or the ability to post to a Facebook timeline doesn’t turn a real money gambling game into a social game."
“Facebook Home, Deals, Places, Online Offers, Questions, Subscribe, even Credits are among the company’s failed endeavours. Retailers large and small abandoned their “storefronts” as the consumer conversion wasn’t there either - so it’s not just a gambling thing.”